Economy now more important than military expenses, Russia's budget plans show

Russia is set to cut military spending next year in favor of boosting the national economy, marking the first time in seven years the two areas have traded places in the government’s budget plans.

Moscow has had to revise the country’s spending plan in the wake of the coronavirus outbreak, with the government approving a new federal budget bill for the next three years earlier this week.

According to a note relating to the draft plan, seen by business news outlet RBC, military costs are set to stand at 3.11 trillion rubles ($41.08 million) in 2021, equivalent to around 14.5 percent of all government expenses. That’s over one percent lower than the funds allocated for the national economy, which are expected to total 3.37 trillion rubles ($44.51 billion).

This means that in 2021, national economy expenses will beat those of the military for the first time since 2014. At the same time, military spending will account for just 2.7 percent of Russia’s gross domestic product – the lowest share in a decade.

Compared to pre-crisis plans, the 2021 military spending is set to be trimmed by 120 billion rubles. With the crisis hitting most businesses and industries hard, Moscow has had to boost support for the national economy by 19 percent, including increased spending for the space sector and infrastructure projects, as well as subsidizing air carriers and agriculture companies, among others.

Military expenses have been on the rise since 2012 as part of Russia’s rearmament and weapons modernization program.

Early forecasts expected the Russian economy to contract up to seven percent this year in the wake of the coronavirus crisis, but more recent predictions have been more positive, expecting the slump to be between four and five percent. Starting next year, the Russian government expects the GDP to gain over three percent.

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